Posted by

Tom Nolan, Policy Adviser

24 Jul 2012

The coalition came to power over two years ago promising to radically reform the way the UK energy market worked. The largest proportion of those reforms is to be contained in an energy bill that is expected to be published later this year. Sensibly, the government felt that reform of this scale deserved proper scrutiny before they introduced a bill. Therefore, last May they gave the public first sight of a draft bill and asked the Parliamentary Energy and Climate Change Select Committee to examine the proposals. Over the last few weeks the committee and being carrying out there inquiry and have this week published their views on the bill.

The committee, which is chaired by Conservative Tim Yeo MP, are highly regarded in the energy industry. This respect has been gained due to the quality of their previous investigations into issues such as the EU ETS and shale gas. There is an ongoing debate as to whether committees should have greater independence and have more of a say in the governance process. The overall performance of select committees have been mixed of late, but I think it is fair to say that the energy committee is one of the best performing and has strengthen the argument for granting committees more power. So when they were given time – albeit a relatively short period – to investigate the proposed reforms it was very much welcomed.

The Committee heard from over 30 witnesses, including the Secretary of State for energy and representatives from the big six energy companies. However, they did not get the opportunity to question a representative from the Treasury. The Treasury refusal to put someone forward to face the Committee has drawn the ire of many commentators and hasn’t exactly helped quench the view that the Treasury and DECC are not of one view on energy issues.

Overall the Committee delivered a fairly negative analysis of the draft bill. Worryingly, they feel that it could impose unnecessary costs on consumers and deter badly needed investment. Their main concern is the government’s refusal to guarantee the contracts that generators of electricity will sign to deliver new nuclear and renewable forms of energy.

Our main concern with the bill has been its complexity and vagueness in parts. Some of the committee recommendations would help address these concerns and we hope the report receives careful consideration by the government before they proceed with the introduction of a full bill.

Now that the Committee has delivered its verdict we should expect to see the full bill in the autumn, as has been promised on numerous occasions. Allowing Parliament time to scrutinise a draft bill was the correct decision, but it must not be used as an excuse to delay reform.